Global permeate use on the rise
Global food and beverage manufacturers are increasingly tapping into the multiple functional benefits of permeate. According to the Innova Market Insights database, the number of global new product launches containing permeate rose at a compound annual growth rate of 64 percent from 2010 to 2014 (after growing a healthy 11 percent from 2005-2009). Although Western Europe and the United States accounted for nearly two-thirds of new product introductions, usage is rising in Africa, Asia and the Middle East as well.
Research and development efforts by the U.S. dairy industry have helped define the sensory, functional and nutritional benefits of whey and milk permeates (including cost savings and flavor enhancement), and food and beverage manufacturers are beginning to get the message. Dairy products accounted for a quarter of all new permeate product launched from 2010-2014, with bakery products at 18 percent and hot drinks at 15 percent. All three categories saw steady growth from 2010-2014 in terms of new product rollouts.
USDEC published a press release at www.ThinkUSAdairy.org with more details on permeate trends as well as links to permeate information for U.S. dairy ingredient customers, including a permeate overview document, the USDEC product prototype database and a video on the role permeate plays in sodium reduction. (USDEC staff)
MARKET CONDITIONS
GDT falls 3.6 percent
The GlobalDairyTrade (GDT) Price Index dropped 3.6 percent to an average winning price of US$2,620/ton at the April 15 auction. It was the third decline in a row, although smaller then the previous two. Milk powder led the fall, as the average winning price for WMP slipped 4.3 percent (to US$2,446/ton) and SMP lost 7.8 percent (to US$2,253/ton). Overall, results were mixed. Cheddar (+2.7 percent to US$2,888/ton), AMF (+2.3 percent to US$3,744/ton) and buttermilk powder (+2.1 percent to US$2,208/ton) all rose. The average winning price for butter declined 6.6 percent to US$3,026/ton while casein held relatively steady at US$6,949/ton.
The results suggest widespread belief that supply is still more than adequate to meet needs and reports of supply disruptions from New Zealand were overblown. The market is moving toward equilibrium but that movement is slow. Reports from China indicate inventories are gradually declining, but still have a way to go to reignite more aggressive Chinese purchasing. Pricing signals are reaching more farmers, but the production reaction has so far been only moderate. (USDEC staff; GDT)
MARKET ACCESS
Talks of Russia loosening embargo remain speculation
Media reports continue to suggest that Russia is preparing to loosen its embargo of western ag products, including dairy, but there have been no indications the reports are anything more than empty rhetoric. Russia’s ag minister said the nation “may have proposals” to relax the ban for Cyprus, Greece and Hungary, but the government has taken no concrete action, and even if it were to offer such a scheme, there is no guarantee that the EU would accept a removal of the ban that did not apply to the entire bloc.
The ambiguous nature of the situation is akin to the trek India has been on with Russia with regard to dairy exports. Almost since the beginning of the embargo in August 2014, India has been touting progress in ironing out a deal that would allow Indian dairy exports into the nation to replace Western product, but an official agreement remains elusive. (USDEC staff; Reuters, 4/9/15; AP, 4/8/15)
COMPANY NEWS
Murray Goulburn sets capital structure vote, plans capacity expansion
Australia’s Murray Goulburn Co-operative slated a general meeting on May 8 for members to vote on its new capital structure. The co-op hopes to raise A$500 million (about US$380 million) to back growth initiatives that will allow it to better compete in international markets. The new capital structure—more than a year in the making—permits outsiders to invest in the dairy while keeping co-op ownership and control in the hands of member farmers. Murray Goulburn says it plans to increase its focus on consumer cheese, dairy beverages and nutritional powders with the new funds.
The company earmarked A$260-A$300 million to expand high-end infant formula capabilities at its Koroit, Victoria, plant, A$165-A$190 million to build a new greenfield UHT plant, and A$125-A$145 million to grow its foodservice cheese operations at Cobram, Victoria. (Company reports; The Australian, 4/16/15)
Dutch-Brazilian dairy venture targets Brazil, China
Agri Brasil, a consortium of Brazilian and Dutch investors backed by the Brazilian government, plans to build a massive $3.2 billion dairy complex in the eastern Brazilian state of Bahia. The group is constructing four dairy farms of 30,000 cows each and a processing facility to manufacture UHT milk, milk powder, butter and condensed milk. It expects to start construction on the first farm within the next three months, provided the funding comes together, with the first processed volumes coming online in 2016. Agri Brasil expects the farms to produce 1,000 tons of milk per day and the plant to serve domestic markets as well as exports. It is specifically targeting China for milk powder. (Dairy Markets, 4/13/15)
Mergers and acquisitions
Schreiber Foods purchased three dairy processing facilities from France’s Senoble International. The plants, which produce yogurt and dairy desserts, are located in Noblejas and Talaver de la Reina, Spain, and Zvolan, Slovakia . . . Nestlé is negotiating the sale of its French Davigel subsidiary to European foodservice operator Brakes Group. Davigel supplies refrigerated and frozen meals and ice cream to restaurants and institutions . . . Turkey’s Yildiz Holding has received at least two bids (one from a Middle Eastern buyer and one from Europe) for its Ak Gida dairy business, valued at $950 million. The company said it was deciding whether to sell or spin-off the operation via an IPO . . . FrieslandCampina sold its Debrecen, Hungary, plant to dairy co-op Alföldi Tej, who will continue to operate the facility and manufacture products for FrieslandCampina . . . Japanese food processor Kagome purchased a majority stake in Tasty Bite, a U.S. maker of packaged noodle and rice dishes. (Company reports’ London Evening Standard, 4/15/15; FoodNavigator-Asia.com, 4/15/15; European Supermarket Magazine, 4/13/15; Reuters, 4/11/15, just-foods.com, 4/10/15)
Company news briefs
Fonterra said it is seeking additional sources of whey in Europe. It already has deals in place with Britain’s First Milk and Dairy Crest, Lithuania’s Rokiskio and Netherlands’ A-ware Foods . . . FrieslandCampina is closing its Der Hollander Food cheese packaging plant in Lochem, Netherlands, and transferring activities to existing facilities in Wolvega and Leerdam, where it will invest $20 million to upgrade capabilities. The company said the project would allow it to handle a greater variety of cheese packaging formats for the EU and international markets . . . Canada-based food conglomerate Grober Group is building a $12 million animal feed plant alongside Cayuga Milk ingredients’ facility in Aurelius, N.Y. The operation, which Grober hopes to open by May 2016, will utilize permeate from Cayuga to manufacture animal feed. (Company reports; Auburn Citizen, 4/12/15; DairyReporter.com, 4/3/15)
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